December 07, 2011, 21:31 UTC+3Gazprom and Naftogaz Ukrainy signed an addendum, which allows the Ukrainian company to pay for Russian gas with roubles

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KIEV, December 7 (Itar-Tass) — Naftogaz Ukrainy has transferred about 972.2 million U.S. dollars to Russian Gazprom for natural gas supplies in November.

“We have paid in full in accordance with the current agreements,” the Naftogaz Ukrainy press service told Itar-Tass on Wednesday, December 7.

Naftogaz Ukrainy transferred 210 million U.S. dollars and 7.2 billion Russian roubles to Gazprom for the gas supplied in November, the company said.

Gazprom and Naftogaz Ukrainy signed an addendum to the current gas purchase contract, which allows the Ukrainian company to pay for Russian gas with roubles.

Gazprom CEO Alexei Miller and Ukrainian Energy and Coal Industry Minister Yuri Boiko met in Moscow on December 5, to discuss “bilateral cooperation and noted the fruitfulness of the current dialogue”.

They “agreed that the talks on the terms of Russian gas supplies to Ukraine can be completed before the end of 2011,” Gazprom said.

Energy Minister Sergei Shmatko said earlier that he was confident that “Russia and Ukraine are destined” to find a mutually acceptable solution to the gas issue.

“We think that there are all prerequisites for Russia and Ukraine to find a compromise and come to agreement,” Shmatko said.

Speaking of Russia’s readiness to give a discount to Ukrainian consumers, Shmatko said, “This is a complex issue and a normal negotiating process is underway now.”

“We are destined to find a mutually acceptable solution,” he said.

Ukraine and Russia have so far come to no agreement at their gas pricing talks, but have made considerable progress, Yanukovich said.

“We have given guarantees to the European Union, our partners in Europe, that this question, which we do not even consider to be a conflict, will be resolved in a civilised way,” the president said.

Ukraine “paid and pays an outrageous price for gas”, which “kills the Ukrainian economy”, he said.

“But we keep paying because we have not come to any agreement so far,” he added.

Kiev is seeking to revise the gas agreements with Russia made by former Prime Minister Yulia Timoshenko in January 2009.

Naftogaz Ukrainy CEO Yevgeny Bakulin said a fair price for Russian natural gas would be 230 U.S. dollars per 1,000 cubic metres.

“This is quite an objective price,” he told Channel 5 on Monday, September 5.

He recalled that the Russian gas for Ukraine had cost 179.5 U.S. dollars per 1,000 cubic metres in January 2009 when the current agreement with Russia was signed.

Earlier, Ukraine said it would press for cutting the gas price to 240 U.S. dollars per 1,000 cubic metres.

Yanukovich said he would like to reach an agreement with Russia on a reduction of the price for Russian natural gas supplies for Ukraine by almost 20 percent to 240 U.S. dollars per 1,000 cubic metres.

Ukraine continues to insist on a revision of the gas agreements with Russia.

According to Prime Minister Nikolai Azarov, “a fair gas price for Ukraine would be about 200 U.S. dollars per 1,000 cubic metres of Russian gas”.

“The current gas price is 320 U.S. dollars per 1,000 cubic metres for Poland and 330 U.S. dollars for Germany,” Azarov said. “If the transport component and some other expenses are excluded from this price, a fair gas price for Ukraine, consistent with contracts with Western partners, would be about 200 U.S. dollars per 1,000 cubic metres.”

On January 19, 2009, Russia and Ukraine made 10-year contracts until 2020 for the transit of Russian natural gas to Europe through Ukraine and for gas supplies to Ukraine on the basis of the European pricing formula. Under these agreements, Russian gas is supplied to Ukraine at a 20 percent discount, while the transit rate remained at the 2008 level of 1.7 U.S. dollars for 1,000 cubic metres per 100 kilometres.

On January 1, 2010, the sides switched to market gas prices. According to Russia's Gazprom, 94.6 billion cubic metres of gas were transported through Ukraine in 2010. The transit rate for the Russian gas in 2010 was 2.7 dollars for 1,000 cubic metres per 100 kilometres on the average. In the first quarter of 2011, it was raised to 2.94 U.S. dollars, and Ukraine started talking about new increases for Russia.

In 2010, Ukraine bought gas the average annual price of 337 U.S. dollars per 1,000 cubic metres. In the first quarter of the year, the price was 305 U.S. dollar per 1,000 cubic metres. On April 21, after talks between Medvedev and Yanukovich in Kharkov, Gazprom and Naftogaz Ukrainy signed an addendum to the agreement on gas supplies and gas transit to Europe of January 19, 2009. The addendum gave Ukraine a discount of 100 U.S. dollars if the price exceeds 330 U.S. dollars per 1,000 cubic metres, or 30 percent of the price.

According to the documents, the discount became effective from April 1, 2010. So, the price of gas for Ukraine was 236 U.S. dollars per 1,000 cubic metres in the second quarter of the year, 248 U.S. dollars in the third quarter, and 250 U.S. dollars in the fourth quarter.

Under the agreement reached on October 27, 2010, the price of Russian gas was about 264 U.S. dollars per 1,000 cubic metres in the first quarter of 2011, 295.6 U.S. dollars in the second quarter and 355 U.S. dollars in the first quarter. The average price of gas for Ukraine in 2011 will be 280 U.S. dollars per 1,000 cubic metres, as was projected.